E.U. proposes tougher bank capital requirements

WilliamL. Watts

LONDON (MarketWatch) -- The European Commission on Monday proposed new rules that would force banks to hold more capital as a buffer against risks posed by complex financial instruments. The proposed regulatory changes also take aim at "perverse pay incentives" that encourage excessive risk-taking by financial institutions, said the commission, which is the executive body of the European Union, in a news release. The measures would also require banks to provide fuller details of risk exposure stemming from complex securitized products. Banks would also be required to change the way they assess risks tied to their trading books to make sure they fully reflect potential losses "in the kind of stressed conditions that have been experienced recently," the commission said.

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